Innovation Performance of Pakistani SME's: Micro Level Evidence

This study investigates empirically the determinants of innovation performance of Pakistani SMEs, through micro level evidence. There is research gap of innovation analysis of Pakistani SMEs at micro level. The data has been drawn from World Bank Enterprise Survey of 1247 Pakistani manufacturing SMEs, by applying Bivariat Probit model. Our findings indicated that Pakistani SMEs are less probability to introduce product and process innovation. Additionally, external R&D, networking, absorptive capacity and exports have positive and significant effect on product and process innovation. This provides a way for policy makers to increase investment in infrastructures (i.e. telecommunications and network) and knowledge based assets (i.e. R&D) and should contribute private and public sectors organizations to increasing the innovation performance of SMEs.